I want to setup a mail relay server that can receive emails from particular domains and forward them to a central mail server which will deliver them to their destinations.

This is because the central mail server allows sending email only from authorized domains and to prevent flooding of the authorized domains list I have to setup a mail relay server which is added in list of authorized domains.

sendmail can be used for this (as my google searches suggest) but I could not find any good documentation on configuring sendmail to do this.

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Sendmail wouldn't be my first choice for doing this; it's configuration language will send you mad. I say this without malice, just as an observation -- I spent several years managing sendmail boxes.
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wombleJul 15 '11 at 23:30

Thankyou very much for quick help. It worked nicely. I have to get my relay server added up in the list of trusted senders :P as it is showing Recipient address rejected: Greylisted.
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Jatin KumarJul 16 '11 at 9:06